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Defence ministry needs to table military procurement plan, says PAC

This is one of several recommendations made after the PAC report on the acquisition of the navy's littoral combat ships.

Bernama
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Public Accounts Committee (PAC) chairman Wong Kah Woh with Auditor-General Nik Azman Nik Abdul Majid (right) in a press conference at the Parliament building on Aug 3. Photo: Bernama
Public Accounts Committee (PAC) chairman Wong Kah Woh with Auditor-General Nik Azman Nik Abdul Majid (right) in a press conference at the Parliament building on Aug 3. Photo: Bernama

The defence ministry is to present a substantive plan on military procurement to the parliamentary special select committee on defence and security from time to time by involving all stakeholders.

Public Accounts Committee (PAC) chairman Wong Kah Woh said the matter was among the recommendations made to the ministry following the PAC report on the acquisition of the Royal Malaysian Navy's (TLDM) littoral combat ship (LCS).

Wong said the administration of government contracts should be streamlined to minimise variation orders, to avoid an increase in project cost.

He said PAC also recommended that the Malaysian Anti-Corruption Commission (MACC) take action on all findings by PAC, the Special Committee on Governance Investigation, Government Procurement and Finance (JKSTUPKK) and the Forensic Audit Report, with prosecution to be expedited.

"The incident on the change in the design of the LCS ship from Sigma to (type) Gowind should be a lesson in making future procurements.
 
"The procurement of national defence equipment and assets should prioritise the needs of the end user, which is TLDM in this case, and in general, for all projects and procurement in the future in line with the Defence White Paper 2020-2030," he told a press conference in Parliament today.

Another recommendation tabled by PAC is for the defence ministry to review all options and set the best direction for the LCS project to ensure that public money is spent responsibly, and for the ministry to present a progress report on the LCS every three months until the project is completed.

Wong said PAC held nine proceedings regarding the LCS issue, the first on Nov 18, 2020 and the last on March 8, where several witnesses were called to testify.

The witnesses included Defence Minister Hishammuddin Hussein, ministry secretary-general Muez Abd Aziz, JKSTUPKK chairman Ambrin Buang and navy commander Mohd Reza Sany.

He said the result of the proceedings found that the LCS project was awarded to Boustead Naval Shipyard Sdn Bhd (BNS) through direct negotiations, with the government paying RM6.083 billion, but that not one LCS ship had been completed despite the original schedule stating that five ships would be ready to be handed over by August 2022.

"Due diligence by the government on BNS failed to detect the company's financial problems.

"This was proven when the government had to make advance payments of up to RM1.36 billion to BNS, contrary to Treasury Circular No. 5 of 2007 which was in effect at that time," he said.

He said PAC concluded that TLDM as the end user was ignored by the defence ministry and BNS in the implementation of the LCS project.

The original design of the LCS was Sigma, selected by TLDM and agreed upon by the defence minister, he said. However, this was changed to the Gowind design on July 11, 2011 at the suggestion of BNS which was brought to the defence minister on July 8, 2011.